FIN201 Final Exam Sample MULTIPLE CHOICE. 1. Why will banks permit the use of an overdraft as suitable for funding the purchase of inventory that

2,000,000

The company's prospectus contains estimates that it will earn $200,000 in the first year and pay dividends of 15 cents per share. Brokers anticipate that dividends will grow at 6% per annum. The shares are currently selling at $3. The statutory company income tax rate is 30 cents in the dollar and the proportion of the tax collected from the company that is claimed by shareholders is 0.60. Calculate the cost of capital for Kerry Ltd. (chapter 14)